Foreign Trade Policy 2010

8/9/2019 Foreign Trade Policy 2010

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Foreign Trade Policyftp 2010Suhail E


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Foreign Trade Policy27th August 2009 - 31st March 2014

GovernmentofIndiaFOREIGN TRADE POLICY 2009-14FOREWORD

The UPAGovernment hasassumedofficeatachallengingtime whentheentire worldisfacinganunprecedentedeconomicslow-down. The year2009 is witnessingoneofthemostsevereglobalrecessionsinthepost-warperiod. Countriesacrossthe world havebeenaffectedinvaryingdegreesandallmajoreconomicindicatorsofindustrialproduction,trade,capitalflows,unemployment,percapitainvestmentandconsumption havetakena hit. TheWTO estimatesprojectagrimforecastthatglobaltradeislikely todeclineby 9% involumetermsandthe IMF estimatesprojectadeclineofover11%.Therecessionary trend has hugesocialimplications. The World Bankestimate

suggeststhat 53 millionmorepeople wouldfallintothepoverty netthis yearandoverabillionpeople wouldgochronically hungry.Though India hasnotbeenaffectedtothesameextentasothereconomiesofthe world, yetourexports havesufferedadeclineinthelast 10 monthsduetoacontractionindemandinthetraditionalmarketsofourexports.Theprotectionistmeasuresbeingadoptedby someofthesecountries haveaggravatedtheproblem. Afterfourclearquartersofrecessionthereissomesignofaturnaroundandtheemergenceofgreenshoots,though I wouldbehesitantto hazardaguessonthenatureandextentofthisrecovery andthetimethemajoreconomies willtaketoreturntotheirpre-recessiongrowth

levels.Announcinga Foreign Trade Policy inthiseconomicclimateisindeedadauntingtask. Wecannotremainoblivioustodecliningdemandinthedeveloped worldand weneedtosetinmotionstrategiesandpolicy measureswhich willcatalysethegrowth ofexports.vi

Beforedefiningtheobjectivesofthenew policy it wouldbeusefultotakestockofourachievementsintheforeigntradeoverthelast 5 years. Theforeigntradepolicy announcedby the UPAGovernmentin 2004 hadsettwoobjectives,namely, (i)todoubleourpercentageshareofglobalmerchandizetrade within 5 yearsand (ii)usetradeexpansionasaneffectiveinstrumentofeconomicgrowth andemploymentgeneration. Lookingback, wecansaywith satisfactionthatthe UPAGovernment hasdeliveredonitspromise.Agricultureandindustry hasshownremarkableresilienceanddynamismincontributingtoa healthy growth inexports.Inthelastfive yearsourexports witnessedrobustgrowth toreach alevelofUS$ 168 billionin 2008-09 from US$ 63 billionin 2003-04. Ourshareofglobalmerchandisetrade was 0.83% in 2003; itroseto 1.45% in 2008 asper


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WTO estimates. Ourshareofglobalcommercialservicesexport was 1.4% in2003; itroseto 2.8% in 2008. Indiastotalshareingoodsandservicestradewas 0.92% in 2003; itincreasedto 1.64% in 2008. Ontheemploymentfront,studies havesuggestedthatnearly 14 millionjobs werecreateddirectly orindirectly asaresultofaugmentedexportsinthelastfive years.

Theshorttermobjectiveofourpolicy istoarrestandreversethedecliningtrendofexportsandtoprovideadditionalsupportespecially tothosesectorswhich havebeen hitbadly by recessioninthedeveloped world. We wouldliketosetapolicy objectiveofachievinganannualexportgrowth of15% withanannualexporttargetofUS$ 200 billionby March 2011. Intheremainingthree yearsofthis Foreign Trade Policy i.e.upto 2014,thecountry shouldbeabletocomebackonthe high exportgrowth path ofaround 25% perannum.By 2014, weexpecttodouble Indiasexportsofgoodsandservices. Thelongtermpolicy objectivefortheGovernmentistodouble Indiasshareinglobaltradeby 2020.

Inordertomeettheseobjectives,theGovernment wouldfollow amixofpolicy measuresincludingfiscalincentives,institutionalchanges,proceduralrationalization,enhancedmarketaccessacrossthe worldanddiversificationofexportmarkets. Improvementininfrastructurerelatedtoexports; bringingdowntransactioncosts,andprovidingfullrefundofallindirecttaxesandvii

levies, wouldbethethreepillars, which willsupportustoachievethistarget.EndeavourwillbemadetoseethattheGoodsand Services Taxrebatesallindirecttaxesandleviesonexports.Atthisjuncture,itisourendeavourtoprovideadequateconfidenceto

ourexporterstomaintaintheirmarketpresenceeveninaperiodofstress. ASpecialthrustneedstobeprovidedtoemploymentintensivesectors whichhave witnessedjoblossesinthe wakeofthisrecession,especially inthefieldsoftextile,leather, handicrafts,etc.We wanttoprovideastablepolicy environmentconduciveforforeigntradeand we havedecidedtocontinue with the DEPB Schemeupto December2010 andincometaxbenefitsunderSection 10(A)forIT industry andunderSection 10(B)for100% exportorientedunitsforoneadditional yeartill31stMarch 2011. Enhancedinsurancecoverageandexposureforexportsthrough ECGC Schemes hasbeenensuredtill 31stMarch 2010. We havealsotakenaview tocontinue with theinterestsubventionschemeforthispurpose.Weneedtoencouragevalueadditioninourmanufacturedexportsandtowardsthisend, havestipulatedaminimum 15% valueadditiononimportedinputsunderadvanceauthorizationscheme.Itisimportanttotakeaninitiativetodiversify ourexportmarketsandoffsettheinherentdisadvantageforourexportersinemergingmarketsofAfrica, Latin America, Oceaniaand CIS countriessuch ascreditrisks,highertradecostsetc.,through appropriatepolicy instruments.We have


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endeavoredtodiversify productsandmarketsthrough rationalizationofincentiveschemesincludingtheenhancementofincentiverates which havebeenbasedontheperceivedlongtermcompetitiveadvantageofIndiainaparticularproductgroupandmarket. New emergingmarkets havebeengivenaspecialfocustoenablecompetitiveexports. This wouldofcoursebe

contingentuponavailability ofadequateexportablesurplusforaparticularproduct. Additionalresources havebeenmadeavailableunderthe MarketDevelopment Assistance Schemeand Market Access Initiative Scheme.Incentiveschemesarebeingrationalizedtoidentify leadingproducts whichwouldcatalyzethenextphaseofexportgrowth.viii

Aspartofourpolicy ofmarketexpansion, we havesigneda ComprehensiveEconomic Partnership Agreement with South Korea which willgiveenhancedmarketaccessto Indianexports. We havealsosigneda TradeinGoodsAgreement with ASEAN which willcomeinforcefrom January 01, 2010,

and willgiveenhancedmarketaccesstoseveralitemsofIndianexports.Thesetradeagreementsareinline with Indias LookEast Policy. We havealsoconcludedthe MercosurPreferential Trade Agreement. Itshallbeourendeavourtodeepenourtradeengagement with othermajoreconomicgroupingsinthe world.TheGovernmentseekstopromote Brand Indiathrough sixormore Madein Indiashowstobeorganizedacrossthe worldevery year.Intheeraofglobalcompetitiveness,thereisanimperativeneedforIndianexporterstoupgradetheirtechnology andreducetheircosts. Accordingly,animportantelementofthe Foreign Trade Policy isto helpexportersfor

technologicalupgradation. Technologicalupgradationofexportsissoughttobeachievedby promotingimportsofcapitalgoodsforcertainsectorsunderEPCGatzeropercentduty.Underthepresent Foreign Trade Policy,Governmentrecognizesexportersbasedontheirexportperformanceandthey arecalled status holders. Fortechnologicalupgradationoftheexportsector,thesestatus holders willbepermittedtoimportcapitalgoodsduty free (through Duty Credit Scripsequivalentto 1% oftheirFOB valueofexportsintheprevious year),ofspecifiedproductgroups. This will helpthemtoupgradetheirtechnologyandreducecostofproduction.Forupgradationofexportsectorinfrastructure, TownsofExportExcellenceandunitslocatedtherein wouldbegrantedadditionalfocusedsupportandincentives.Thepolicy iscommittedtosupportthegrowth ofprojectexports. Ahigh levelcoordinationcommitteeisbeingestablishedinthe DepartmentofCommercetofacilitatetheexportofmanufacturedgoods / projectexportscreatingsynergiesinthelineofcreditextendedthrough EXIM Bankfornewandemergingmarkets. Thiscommittee would haverepresentationfromthe


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Ministry ofExternal Affairs, DepartmentofEconomic Affairs, EXIM Bankandthe Reserve BankofIndia. We wouldliketoencourageproductionandexportofgreenproductsthrough measuressuch asphasedmanufacturingprogrammeforgreenvehicles,zeroduty EPCGschemeandincentivesfor

exports.Toenablesupportto Indianindustry andexporters,especially the MSMEs,inavailingtheirrightsthrough traderemedy instrumentsunderthe WTOframework, weproposetosetupa DirectorateofTrade Remedy Measures.Inordertoreducethetransactioncostandinstitutionalbottlenecks,thee-tradeproject wouldbeimplementedinatimeboundmannertobringallstake holdersonacommonplatform. Additionalports/locations wouldbeenabledonthe Electronic Data Interchangeoverthenextfew years. AnInter-Ministerial Committee hasbeenestablishedtoserveasasingle windowmechanismforresolutionoftraderelatedgrievances.

Thesearedifficulttimesand we havesetanambitiousgoalforourselves.I amsurethattheindustry andtheGovernment, workingintandem, willbeabletoensurethatthe Indianexportsbecomeglobally competitiveandthatweareabletoachievethetarget, which we havesetforourselves.(Anand Sharma)MinisterofCommerce & IndustryGovernmentofIndiaNew DelhiAugust 27, 2009

SPECIAL FOCUS INITIATIVESSpecial Focus 1B.1 With aview tocontinously increasingourpercentageshareofglobaltradeandexpandingemploymentopportunities,certainspecialfocusinitiatives havebeenidentified/continuedforMarket Diversification, Technological Upgradation,Supporttostatus holders, Agriculture, Handlooms, Handicraft,Gems & Jewellery,Leather, Marine, Electronicsand IT Hardwaremanufacturing Industries,Greenproducts,ExportsofproductsfromNorth-East, SportsGoodsand Toyssectors.GovernmentofIndiashallmakeconcertedeffortstopromoteexportsinthesesectorsby specificsectoralstrategiesthatshallbenotifiedfromtimetotime. FurtherSectoral Initiativesinothersectors willalsobeannouncedfromtimetotime.(i) Market Diversification

Weakerdemandindevelopedeconomies,triggeredby fallingassetpricesandincreasedeconomicuncertainty haspulleddownthegrowth ofIndiasexportstodevelopedcountries. Therearenoclearsignalsasto whenthemarketsindevelopedcountries wouldrevive. Toinsulate Indianexportsfromthedeclineindemandfromdevelopedcountries,inthis Policy focusisondiversificationofIndianexportstoothermarkets,specially thoselocatedin Latin America, Africa,partsofAsiaand Ocenia. ToachievediversificationofIndian


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exports,followinginitiatives havebeentakenunderthisPolicy.(a) 26 new countries havebeenincluded withintheambitofFocusMarket Scheme.(b) TheincentivesprovidedunderFocusMarket Scheme

havebeenincreasedfrom 2.5% to 3%.(c) There hasbeenasignificantincreaseintheoutlayunderMarket Linked Focus Product Schemeby inclusionofmoremarketsandproducts. Thisensuressupportforexportstoallcountriesin Africaand Latin America.(ii) Technological Upgradation

Tousherinthenextphaseofexportgrowth, Indianeedstomoveupinthevaluechainofexportgoods.Thisobjectiveissoughttobeachievedby encouragingtechnologicalupgradationofourexportsector. A numberofinitiatives havebeentakeninthis Policy tofocusontechnologicalupgradation; such initiativesinclude:(a) EPCG Schemeatzero

duty hasbeenintroducedforcertainengineeringproducts,electronicproducts,basicchemicalsandpharmaceuticals,apparelandtextiles,plastics, handicrafts,chemicalsandalliedproductsandleatherandleatherproducts.(b) Theexisting 3 % EPCG Scheme hasbeenconsiderablysimplified,toeaseitsusageby theexporters.(c) Toencouragevalueaddedmanufactureexport,aminimum 15 % valueadditiononimportedinputsunderAdvance Authorisation Scheme hasbeenstipulated.(d) A numberofproductsincludingautomobilesandotherengineeringproducts havebeenincludedforincentivesunderFocus Product,andMarket LinkedFocus Product Schemes.(e) Stepstoencourage Project Exportsshallbetaken.(iii) Support to status holdersTheGovernmentrecognized Status Holderscontributeapprox. 60% ofIndiasgoodsexports. Toincentiviseandencouragethestatus holders,as wellastoencourageTechnologicalupgradationofexportproduction,additionalduty creditscrip @ 1 % ofthe FOB ofpastexportshallbegrantedforspecifiedproductgroupsincludingleather,specificsubsectorsinengineering,textiles,plastics, handicraftsandjute. Thisduty creditscripcanbeusedforimportofcapitalgoodsby thesestatus holders. Theimportedcapitalgoodsshallbesubjecttoactualusercondition.

(iv) Agriculture and Village Industry(a) Vishesh KrishiandGram Udyog Yojana(b) CapitalgoodsimportedunderEPCG willbepermittedtobeinstalledanywhereinAEZ.(c) Importofrestricteditems,such aspanels,areallowedundervariousexportpromotionschemes.(d) Importofinputssuch aspesticidesarepermittedunderAdvance Authorisationforagroexports.(e) New townsofexportexcellence with athresholdlimitofRs 150 croreshallbenotified.(f) Certainspecifiedflowers,fruitsandvegetablesareentitledtoaspecialduty creditscrip,inadditiontothenormalbenefitunderVKGUY.

(v) Handlooms


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(a) SpecificfundsareearmarkedunderMAI / MDASchemeforpromoting handloomexports.(b) Duty freeimportentitlementofspecifiedtrimmingsandembellishmentsis 5 % ofFOB valueofexportsduringpreviousfinancial year.c) Duty freeimportentitlementofhandknottedcarpetsamplesis 1 % ofFOB valueof

exportsduringpreviousfinancial year.(d) Duty freeimportofoldpiecesofhandknottedcarpetsonconsignmentbasisforre-exportafterrepairispermitted.(e) New townsofexportexcellence with athresholdlimitofRs 150 croreshallbenotified.(f)Machinery andequipmentforeffluenttreatmentplantsisexemptfromcustomsduty.10

(vi) Handicrafts(a) Duty freeimportentitlementoftools,trimmingsandembellishmentsis 5 %ofFOBvalueofexportsduringpreviousfinancial year. Entitlementisbroadbanded,andshallextendalsotomerchantexporterstiedup with supportingmanufacturers.

(b) Handicraft EPC isauthorizedtoimporttrimmings,embellishmentsandconsumablesonbehalfofthoseexportersforwhomdirectly importingmay notbeviable.(c) SpecificfundsareearmarkedunderMAI & MDASchemesforpromoting Handicraftexports.(d) CVD isexemptedonduty freeimportoftrimmings,embellishmentsandconsumables.(e) New townsofexportexcellence with areducedthresholdlimitofRs 150 croreshallbenotified.(f)Machinery andequipmentforeffluenttreatmentplantsareexemptfromcustomsduty.(g) All handicraftexports wouldbetreatedasspecialFocusproductsandentitledtohigherincentives.

(vii) Gems & Jewellery(a) Importofgoldof8 kandaboveisallowedunderreplenishmentschemesubjecttoimportbeingaccompaniedby an Assay Certificatespecifyingpurity, weightandalloycontent.(b) Duty Free Import Entitlement (basedon FOBvalueofexportsduringpreviousfinancial year)ofConsumablesand Tools,for:1. Jewellerymadeoutof:(a) Preciousmetals (otherthanGold &Platinum)2%(b)Goldand Platinum1%(c) Rhodiumfinished Silver3%112. Cutand Polished Diamonds1%(c) Duty freeimportentitlementofcommercialsamplesshallbe Rs. 300,000.(d) Duty freere-importentitlementforrejectedjewelleryshallbe 2% ofFOB valueofexports.(e) ImportofDiamondsonconsignmentbasisforCertification/ Grading & re-exportbytheauthorizedoffices/agenciesofGemological InstituteofAmerica(GIA)in Indiaorotherapprovedagencies willbepermitted.(f) PersonalcarriageofGems & Jewelleryproductsincaseofholding/participatinginoverseasexhibitionsincreasedto US$ 5 millionandto US$ 1 millionincaseofexportpromotiontours.


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(g) Extensioninnumberofdaysforre-importofunsolditemsincaseofparticipationinanexhibitionin USAincreasedto 90 days.(h) Inanendeavourtomake Indiaadiamondinternationaltrading hub,itisplannedtoestablishDiamond Bourse (s).

(viii) Leather and Footwear

(a) Duty freeimportentitlementofspecifieditemsis3% ofFOB valueofexportsofleathergarmentsduringprecedingfinancial year.(b) Duty freeentitlementforimportoftrimmings,embellishmentsandfootwearcomponentsforfootwear(leatheras wellassynthetic),gloves,travelbagsand handbagsis3 % ofFOB valueofexportsofpreviousfinancial year. Such entitlementshallalsocoverpackingmaterial,such asprintedandnonprintedshoeboxes,smallcartonsmadeofwood,tinorplasticmaterialsforpackingfootwear.(c) Machinery andequipmentforEffluent TreatmentPlantsshallbeexemptfrombasiccustomsduty.(d) Re-exportofunsuitableimportedmaterialssuch12asraw hides & skinsand wetblueleathersispermitted.

(e) CVD isexemptedonliningandinterliningmaterialnotifiedat S.No 168 ofCustomsNotification No21/2002 dated 01.03.2002.(f) CVD isexemptedonraw,tannedanddressedfurskinsfallingunderChapter43 ofITC(HS).(g) Re-exportofunsold hides,skinsandsemifinishedleathershallbeallowedfromPublic Bondedwarehouseat 50% oftheapplicableexportduty.

(ix) Marine Sector(a) ImportsfortechnologicalupgradationunderEPCGinfisheriessector(exceptfishingtrawlers,ships,boatsandothersimilaritems)exemptedfrommaintainingaverageexportobligation.(b) Duty freeimportofspecifiedspecialisedinputs /chemicalsandflavouringoilsisallowedtotheextentof1% ofFOB valueofprecedingfinancial yearsexport.(c) Toallow importofmonofilamentlonglinesystemfortunafishingataconcessionalrateofduty andBait Fish fortunafishingat Nilduty.(d) A selfremovalprocedureforclearanceofseafoodwasteisapplicablesubjecttoprescribedwastagenorms.(e) MarineproductsareconsideredforVKGUYscheme.(x) Electronics and IT Hardware Manufacturing

Industries(a) ExpeditiousclearanceofapprovalsrequiredfromDGFT shallbeensured.(b) Exporters /AssociationswouldbeentitledtoutilizeMAI & MDA Schemesforpromoting Electronicsand IT Hardware Manufacturingindustry exports.


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13(xi) Sports Goods and Toys

(a) Duty freeimportofspecifiedspecialisedinputsallowedtotheextentof3 % ofFOB valueofprecedingfinancial yearsexport.

(b) Sportsgoodsandtoysshallbetreatedasa PrioritysectorunderMDA / MAI Scheme. SpecificfundswouldbeearmarkedunderMAI /MDA Schemeforpromotingexportsfromthissector.(c) Applicationsrelatingto SportsGoodsand Toysshallbeconsideredforfasttrackclearanceby DGFT.(d) SportsGoodsand Toysaretreatedasspecialfocusproductsandentitledto higherincentives.(xii) Green products and technologies

Indiaaimstobecomea hubforproductionandexportofgreenproductsandtechnologies. Toachievethis

objective,specialinitiativewillbetakentopromotedevelopmentandmanufactureofsuchproductsandtechnologiesforexports. Tobegin with,focus wouldbeonitemsrelatingtotransportation,solarandwindpowergenerationandotherproductsasmaybenotified which willbeincentivizedunderRewardSchemesofChapter3 ofFTP.(xiii) Incentives for Exports from the North Eastern

RegionInordertogiveafilliptoexportsofproductsfromthenorth-eastern States,notifiedproductsofthisregionwouldbeincentivizedunderReward SchemesofChapter3 ofFTP.1415

Board of TradeBoard of Trade 1C.1 BOT hasaclearanddynamicroleinadvisinggovernment

(BOT) onrelevantissuesconnected with Foreign Trade.Terms of Reference 1C.2 BOT hasfollowingtermsofreference:I ToadviseGovernmenton Policy measuresforpreparationandimplementationofboth shortandlongtermplansforincreasingexportsinthelight

ofemergingnationalandinternationaleconomicscenarios;II Toreview exportperformanceofvarioussectors,identify constraintsandsuggestindustry specificmeasurestooptimizeexportearnings;III Toexamineexistinginstitutionalframeworkforimportsandexportsandsuggestpracticalmeasuresforfurtherstreamliningtoachievedesiredobjectives;


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IV Toreview policy instrumentsandproceduresforimportsandexportsandsuggeststepstorationalizeandchannelizesuch schemesforoptimumuse;V Toexamineissues which areconsideredrelevantforpromotionofIndiasforeigntrade,andtostrengthen

internationalcompetitivenessofIndiangoodsandservices; andVI Tocommissionstudiesforfurtheranceofaboveobjectives.Composition 1C.3 Commerce & Industry Ministerwillbethe ChairmanoftheBoardofTrade (BOT).Governmentshallalsonominateupto 25 persons,ofwhomatleast 1 0 willbeexpertsintradepolicy. Inaddition, Chairmenofrecognized EPCsand PresidentorSecretary-GeneralsofNational ChambersofCommerce willbeex-officiomembers. BOT willmeetatleastonceevery quarter.

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CHAPTER-2

GENERAL PROVISIONS REGARDING IMPORTS AND EXPORTSExports and Imports 2.1 Exportsand Importsshallbefree,except whereregulatedfree unless regulatedby FTP orany otherlaw inforce. Theitemwiseexportandimportpolicy shallbe,asspecifiedin ITC (HS)notifiedby DGFT,asamendedfromtimetotime.Importofrough diamondfrom CotedIvoireshallbeprohibitedincomplianceto Paragraph 6 ofUN SecurityCouncil Resolution (UNSCR) 1643(2005).

Theimport/exportofrough diamond (HS Code 710210,710221 or710231)from / to Venezuelashallbeprohibitedinview ofvoluntary separationofVenezuelafromtheKimberley Process Certification Scheme (KPCS). NoKimberley Process Certificateshallbeaccepted / endorsed/issuedforimportandexportofrough diamondsfrom / toVenezuela.2.1.1 Import / exportofarmsandrelatedmaterialfrom / to Iraqshallbeprohibited.2.1.2 Directorindirectexportandimportoffollowingitems,whetherornotoriginatinginDemocratic Peoples

RepublicofKorea (DPRK),to / from, DPRKisprohibited:Allitems,materialsequipment,goodsandtechnologyincludingassetoutinlistsindocuments S/2006/814,S/2006/815 and S/2006/853(United Nations SecurityCouncil Documents) which couldcontributeto DPRKsnuclear-related,ballisticmissile-relatedorotherweaponsofmassdestruction-relatedprogrammes.


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2.1.3 Directorindirectexportandimportofallitems,materials,equipment,goodsandtechnology which couldcontributeto Iransenrichment-related,reprocessingorheavy waterrelatedactivities,ortodevelopmentofnuclearweapondelivery systems,asmentionedbelow, whetherornot

originatingin Iran,to / from Iranisprohibited:i)items,listedin INFCIRC/254/Rev8/Part I in18document S/2006/814,in Sections B.2 to B.7 aswellas A.I and B.I exceptsupply,saleortransferofequipmentcoveredby B.I whensuch equipmentisforlight waterreactorsandlow-enricheduraniumcoveredby A.1.2 whenitisincorporatedinassemblednuclearfuelelementsforsuch reactors;ii)itemslistedin S/2006/815 exceptsupply saleortransferofitemscoveredby 19.A.3 ofCategory II.

Above-mentioned UN Security Councildocumentsareaccessiblefrom DGFT website.Compliance with Laws 2.2 Every exporterorimportershallcomply with theprovisionsofFT (D&R) Act,the Rulesand Ordersmadethere-under, FTP andtermsandconditionsofanyAuthorisationgrantedto him. Allimportedgoodsshallalsobesubjecttodomestic Laws, Rules, Orders, Regulations,technicalspecifications,environmentalandsafety normsasapplicabletodomesticallyproducedgoods. Noimportorexportofrough diamondsshallbepermittedunlessaccompaniedby Kimberley Process (KP) Certificateasspecifiedby Gem & Jewellery EPC (GJEPC).Interpretation of Policy 2.3 Ifany questionordoubtarisesinrespectofinterpretationofany provisioncontainedin FTP,orclassificationofany itemin ITC (HS)orHBP-v1 orHBP-v2,orScheduleofDEPB Rates (includingcontent,scopeorissueofanauthorizationthereunder)said questionordoubtshallbereferredto DGFT whosedecisionthereonshallbefinalandbinding.Procedure 2.4 DGFT may,specifyproceduretobefollowedforanexporterorimporterorby any licensingorany othercompetentauthority forpurposeofimplementingprovisionsofFT (D&R) Act,the Rulesandthe Ordersmadethereunderand FTP. Suchproceduresshallbepublishedbymeansofa Public Notice,andmay,inlikemanner,beamendedfromtimetotime.Exemption from Policy 2.5 DGFT maypasssuch ordersorgrantsuch relaxationor/ Procedure relief,as hemay deemfitandproper,ongroundsofgenuine hardshipandadverseimpactontrade.DGFT may,inpublicinterest,exemptanypersonorclass


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orcategory ofpersonsfromanyprovisionofFTP or19anyprocedureandmay, whilegrantingsuch exemption,imposesuch conditionsas hemay deemfit. Such requestmay beconsideredonly afterconsultingcommitteesas

under:Sl.No.Description Committee( i) Fixation / modificationofproductnormsunderallschemesNormsCommittee(ii) Nexus with CapitalGoods (CG)andbenefitsunderEPCG SchemesEPCG

Committee(iii) Allotherissues PolicyRelaxationCommittee(PRC)Principles of Restriction 2.6 DGFT may,through anotification,adoptandenforceanymeasurenecessary for: -i Protectionofpublicmorals.ii Protectionofhuman,animalorplantlifeorhealth.iii Protectionofpatents,trademarksandcopyrightsandthepreventionofdeceptivepractices.iv Preventionofuseofprisonlabour.v Protectionofnationaltreasuresofartistic, historicorarchaeologicalvalue.vi Conservationofexhaustiblenaturalresources.vii Protectionoftradeoffissionablematerialormaterialfrom which they arederived; andviii Preventionoftrafficinarms,ammunitionandimplementsofwar.Restricted Goods 2.7 Any goods,exportorimportofwhich isrestrictedunderITC(HS)may beexportedorimportedonly inaccordancewith an Authorisationorintermsofapublicnoticeissuedinthisregard.Terms andConditions 2.8 Every Authorisationshallbevalidforprescribedperiodof

of a licence /Certificate /validity andshallcontainsuch termsandconditionsasPermission / Authorisationmay bespecifiedby RA which may include:(a) Quantity,descriptionandvalueofgoods;(b) Actual Usercondition;(c) Exportobligation;(d) Valueadditiontobeachieved; and


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(e) Minimumexport / importprice.20Authorisation / Licence 2.9 Nopersonmay claiman Authorizationasarightand DGFT/Certificate / Permission orRA shall havepowertorefusetograntorrenew thesame

not a Rightinaccordance withprovisionsofFT (D&R) Act, Rules

madethereunderand FTP.Penalty 2.10 Ifan Authorisation holderviolatesany conditionofsuchAuthorisationorfailstofulfillexportobligation, heshallbeliableforactioninaccordance with FT (D&R) Act,theRulesand Ordersmadethereunder, FTP andany otherlaw fortimebeinginforce.State Trading2.11 Any goods,importorexportofwhich isgovernedthrough exclusiveorspecialprivilegesgrantedto STE(s),may beimportedorexportedby STE(s)asperconditionsspecifiedin ITC (HS). DGFT may, however,grantanAuthorisationtoany otherpersontoimportorexportany

ofthesegoods.Such STE(s)shallmakeany such purchasesorsalesinvolvingimportsorexportssolely inaccordance withcommercialconsiderations,includingprice, quality,availability,marketability,transportationandotherconditionsofpurchaseorsaleinanondiscriminatorymannerandshallaffordenterprisesofothercountriesadequateopportunity,inaccordance with customarybusinesspractices,tocompeteforparticipationinsuchpurchasesorsales.Importer-Exporter2.12 Noexportorimportshallbemadeby anyperson withoutanCode (IEC) NumberIEC numberunlessspecifically exempted. An IEC numbershallbegrantedonapplicationby competentauthority inaccordance with procedurespecifiedinHBP v1.Trade with 2.13 DGFT may issueinstructionsorframeschemesasmay beNeighbouringrequiredtopromotetradeandstrengtheneconomicties withCountries neighbouringcountries.Transit Facility 2.14 Transitofgoodsthrough Indiafrom / ortocountriesadjacentto Indiashallberegulatedinaccordance withbilateraltreatiesbetween Indiaandthosecountriesandwillbesubjecttosuch restrictionsasmay bespecifiedbyDGFT inaccordance with International Conventions.Trade with Russia 2.15 Incaseoftrade with RussiaunderDebt Repaymentunder Debt- Agreement, DGFT may issueinstructionsorframe

Repayment Agreementschemesasmay berequired,andanythingcontainedin21FTP,insofarasitisinconsistent with such instructionsorschemes,shallnotapply.Actual UserCondition 2.16 Capitalgoods,raw materials,intermediates,components,consumables,spares,parts,accessories,instrumentsand


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othergoods, which areimportable withoutany restriction,may beimportedby anyperson.However,ifsuch importsrequirean Authorisation,actualuseralonemay importsuch goodsunlessactualuserconditionisspecifically dispensed withby RA.

Second Hand Goods 2.17 Allsecond handgoods,exceptsecond handcapitalgoods,shallberestrictedforimportsandmaybeimportedonlyinaccordance with provisionsofFTP, ITC (HS), HBP v1,Public Noticeoran Authorisationissuedinthisregard.Importofsecond handcapitalgoods,includingrefurbished / re-conditionedsparesshallbeallowedfreely.However,second handpersonalcomputers / laptops,photocopiermachines,airconditioners,dieselgeneratingsets willonlybeallowedagainstalicence.Importofre-manufacturedgoodsshallbeallowedonlyagainstalicence.

Scrap/Waste in SEZ

2.17A Any wasteorscraporremnantincludingany formofmetallic waste & scrapgeneratedduringmanufacturingorprocessingactivitiesofan SEZ Unit/ Developer/Codevelopershallbeallowedtobedisposedin DTA freelysubjecttopaymentofapplicable Customs Duty.Import of samples 2.18 Importofsamplesshallbegovernedby HBP v1.Import of Gifts 2.19 Importofgiftsshallbepermitted wheresuch goodsareotherwisefreely importableunderFTP. Inothercases,aCustoms Clearance Permit (CCP)shallberequiredfromDGFT.PassengerBaggage 2.20 Bonafide householdgoodsandpersonaleffectsmaybeimportedaspartofpassengerbaggageasperlimits,termsandconditionsthereofin Baggage Rulesnotifiedby Ministry ofFinance.Samplesofsuch itemsthatareotherwisefreely importableunderFTP may alsobeimportedaspartofpassenger22baggage withoutan Authorisation.Exporterscomingfromabroadarealsoallowedtoimportdrawings,patterns,labels,pricetags,buttons,belts,trimmingandembellishmentsrequiredforexport,aspartoftheirpassengerbaggage withoutan Authorisation.Import on Export2.21 Freely exportablenew orsecond handcapitalgoods,basis equipments,components,partsandaccessories,containersmeantforpackingofgoodsforexports,jigs,fixtures,diesandmouldsmay beimportedforexport withoutanAuthorisationonexecutionofLUT / BG with CustomsAuthorities.Re-import of goods 2.22 Capitalgoods,equipments,components,partsandrepaired abroadaccessories, whetherimportedorindigenous,except


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thoserestrictedunderITC (HS)may besentabroadforrepairs,testing, quality improvementorupgradationorstandardizationoftechnology andre-imported withoutanAuthorisation.

Import of goods used2.23 Aftercompletionofprojectsabroad,projectcontractors

in projects abroadmay import, withoutan Authorisationusedgoodsincludingcapitalgoodsprovidedthey havebeenusedforatleastone year.Sale on High Seas 2.24 Saleofgoodson high seasforimportinto Indiamay bemadesubjectto FTP orany otherlaw inforce.Import under Lease 2.25 PermissionofRA isnotrequiredforimportofcapitalgoodsFinancingunderleasefinancing.Clearance of Goods 2.26 Goodsalready imported / shipped / arrived,inadvance,butfrom Customs notclearedfrom Customsmay alsobeclearedagainstanAuthorisationissuedsubsequently.Execution ofBG / LUT2.27 Whereverany duty freeimportisallowedorwhere

otherwisespecifically stated,importershallexecuteprescribed LUT / BG / Bond with Customs Authoritybeforeclearanceofgoods. Incaseofindigenoussourcing,Authorisation holdershallfurnish LUT / BG / BondtoRA concernedbeforesourcingmaterialfromindigenoussupplier/ nominatedagency asprescribedin HBP v1.Private / Public Bonded2.28 Private / Publicbonded warehousesmay besetupinDTAWarehouses for Imports aspertermsandconditionsofnotificationissuedby23DoR.Anypersonmay importgoodsexceptprohibiteditems,armsandammunition, hazardouswasteandchemicalsand warehousetheminsuch bonded warehouses.Such goodsmay beclearedforhomeconsumptioninaccordance with provisionsofFTP andagainstAuthorisation, whereverrequired. Customsduty asapplicableshallbepaidatthetimeofclearanceofsuchgoods.Ifsuch goodsarenotclearedforhomeconsumptionwithinaperiodofone yearorsuch extendedperiodasthecustomauthoritiesmaypermit,importerofsuch goodsshallre-exportthegoods.Free Exports 2.29 Allgoodsmaybeexportedwithoutany restrictionexcepttoextentsuch exportsareregulatedby ITC (HS)oranyotherprovisionofFTP orany otherlaw fortimebeinginforce.DGFT may, however,specify through apublicnoticesuch termsandconditionsaccordingto which any goods,notincludedin ITC (HS),may beexportedwithoutan


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Authorisation.Export of Samples 2.30 Exportofsamplesand FreeofchargegoodsshallbegovernedbyprovisionsgiveninHBP v1.Export of Passenger2.31 Bonafidepersonalbaggagemaybeexportedeitheralong

Baggage with passengeror,ifunaccompanied, withinone year

beforeorafterpassengersdeparturefrom India. However,itemsmentionedasrestrictedin ITC (HS)shallrequireanAuthorisation.GovernmentofIndiaofficialsproceedingabroadonofficialpostingsshall, however,bepermittedtocarry alongwith theirpersonalbaggage,fooditems(free,restrictedorprohibited)strictly fortheirpersonalconsumption.Export of Gifts 2.32 Goods,includingedibleitems,ofvaluenotexceedingRs.5,00,000 /- inalicensing year,maybeexportedasagift.However,itemsmentionedasrestrictedforexports

in ITC (HS)shallnotbeexportedasagift, withoutan24Authorisation.Export of Spares 2.33 Warranty spares (whetherindigenousorimported)ofplant,equipment,machinery,automobilesorany othergoods, (exceptthoserestrictedunderITC (HS))maybeexportedalong with mainequipmentorsubsequently butwithincontracted warrantyperiodofsuch goodssubjecttoapprovalofRBI.Third Party Exports 2.34 Thirdparty exports,asdefinedin Chapter9 shallbeallowedunderFTP.Export of Imported2.35 Goodsimported,inaccordance with FTP,maybeexportedGoods insameorsubstantially sameformwithoutan Authorisationprovidedthatitemtobeimportedorexportedisnotrestrictedforimportorexportin ITC (HS).Exportsofsuch goodsimportedagainstpaymentinfreelyconvertiblecurrency wouldbepermittedagainstpaymentinfreely convertiblecurrency.2.36 Goods,includingthosementionedasrestrictedforimport (exceptprohibiteditems)maybeimportedunderCustoms Bondforexportinfreely convertiblecurrencywithoutan Authorisationprovidedthatitemisfreelyexportable withoutany conditionality / requirementofLicence / permissionasmay berequiredunderITC (HS)Schedule II.2.36 A Hides, Skinsandsemifinishedleathermay beimportedinthe Public Bonded warehouseforthepurposeofDTAsaleandtheunsolditemsthereofcanbere-exportedfromsuch bonded warehousesat 5 0% oftheapplicableexportduty. However,thisfacility shallnotbeallowedfor


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importunderPrivate Bonded warehouse.Export of Replacement2.37 GoodsorpartsthereofonbeingexportedandfoundGoods defective / damagedorotherwiseunfitforusemay bereplacedfreeofchargeby theexporterandsuch goodsshallbeallowedclearanceby Customsauthorities,

providedthatreplacementgoodsarenotmentionedasrestricteditemsforexportsin ITC (HS).Export of Repaired2.38 Goodsorparts,exceptrestrictedunderITC (HS)thereof,Goods onbeingexportedandfounddefective,damagedor25otherwiseunfitforusemay beimportedforrepairandsubsequentre-export.Such goodsshallbeallowedclearance withoutan Authorisationandinaccordance with customsnotification.Private Bonded2.39 Privatebonded warehousesexclusively forexportsmay

Warehouses forEx

ports besetupinDTA aspertermsandconditionsofnotificationsissuedby DoR.Such warehousesshallbeentitledtoprocuregoodsfromdomesticmanufacturers withoutpaymentofduty.Suppliesmadeby adomesticsuppliertosuch notifiedwarehousesshallbetreatedasphysicalexportsprovidedpaymentsaremadeinfreeforeignexchange.Denomination ofExport2.40 AllexportcontractsandinvoicesshallbedenominatedContracts eitherinfreely convertiblecurrency orIndianrupeesbutexportproceedsshallberealisedinfreely convertiblecurrency.However,exportproceedsagainstspecificexportsmayalsoberealizedinrupees,provideditisthrough afreelyconvertible Vostroaccountofanonresidentbanksituatedinany country otherthanamembercountry ofACU orNepalorBhutan. Additionally,rupeepaymentthroughVostroaccountmustbeagainstpaymentinfreeforeigncurrencyby buyerin hisnon-residentbankaccount. Freeforeignexchangeremittedby buyerto hisnon-residentbank(afterdeductingthebankservicecharges)onaccountofthistransaction wouldbetakenasexportrealizationunderexportpromotionschemesofFTP.Contracts [forwhichpaymentsarereceivedthroughAsian Clearing Union (ACU)]shallbedenominatedinACU Dollar. CentralGovernmentmay relaxprovisionsofthisparagraph inappropriatecases. Exportcontractsand Invoicescanbedenominatedin IndianrupeesagainstEXIM Bank/ GovernmentofIndialineofcredit.Realisation ofExport2.41 Ifanexporterfailstorealiseexportproceeds withintimeProceeds specifiedby RBI, heshall, withoutprejudicetoany


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liability orpenalty underany law inforce,beliabletoactioninaccordance withprovisionsofFT (D&R) Act,Rulesand Ordersmadethereunderand FTP.26

Free movement of2.42 Consignmentsofitemsmeantforexportsshallnotbe

export goods withheld / delayedforany reasonby any agency ofCentral / StateGovernment. Incaseofany doubt,authoritiesconcernedmay askforanundertakingfromexporter.No seizure of Stock2.42.1 Noseizureofstockshallbemadeby any agency soastodisruptmanufacturingactivity anddelivery scheduleofexports. Inexceptionalcases,concernedagency mayseizethestockonbasisofprimafacieevidence. However,such seizureshouldbelifted within 7 days.

Export Promotion 2.43 BasicobjectiveofExport Promotion Councils (EPCs)isCouncils (EPC) topromoteanddevelop Indianexports. Each Council

isresponsibleforpromotionofaparticulargroupofproducts,projectsandservicesasgiveninHBP-v1.Registration -cum- 2.44 Anyperson,applyingfor:Membership Certificate

(RCMC) (i)an Authorisationtoimport / export, [exceptitemslistedasrestricteditemsin ITC(HS)]or(ii)any otherbenefitorconcessionunderFTPshallberequiredtofurnish RCMC grantedby competentauthority inaccordance with procedurespecifiedinHBPv1unlessspecifically exemptedunderFTP.CertificateofRegistrationas ExporterofSpices (CRES)issuedby Spices Boardshallbetreatedas Registration-Cum-Membership Certificate (RCMC)forthepurposesunderthis Policy.Trade Facilitation 2.45 ItisendeavorofGovernmentto worktowardsgreaterthrough EDI Initiatives simplification,standardizationand harmonizationoftradedocumentsusinginternationalbestpractices. Asastepinthisdirection, DGFT shallmovetowardsanautomatedenvironmentforelectronicfiling,retrievalandauthenticationofdocumentsbasedonagreedprotocolsandmessageexchange with othercommunitypartnersincluding Customsand Banks.DGCI&SCommercial2.45.1 ToenableuserstomakecommercialdecisionsinamoreTrade Data professionalmanner, DGCI&S tradedatashallbemadeavailable with aminimumtimelagina querybasedstructuredformatonacommercialcriteria.27Fiscal Incentives 2.45.2 With aview topromoteuseofInformation Technology,to promote EDIDGFT willprovidefiscalincentivestousercommunity.Initiatives adoption Deductionsin Application Fee wouldbeadmissiblefor


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applicationssigneddigitally or / and whereapplicationfeeispaidelectronically through EFT (Electronic FundTransfer). Detailsareenumeratedin HBP v1.Regularization ofEO2.46 With aview toprovidingassistancetofirms who have

default and settlement ofdefaultedunderFTP forreasonsbeyondtheircontrolas

customs duty and interestalsofacilitatingmerger,acquisitionandrehabilitationofthrough Settlementsickunits,it hasbeendecidedtoempowerSettlementCommission Commissionin Central BoardofExciseandCustomstodecidesuch casesalso with effectfrom 01.04.2005.Easing of2.47 PendingfinalisationofSingle Common Document (SCD)Documentation forinternationaltrade,Government DepartmentsdealingRequirementwith exportsandimports will honourAuthorisationissuedby otherGovernmentdepartmentsbasedonverificationofexportdocuments Likeshippingbill,bankrealizationcertificate, Packinglist,billofladingetc.and willnot

insistuponfresh submissionofthesedocuments.Exemption /2.48 Forallgoodsandservices which areexportedfromunitsRemission of Service inDTA andunitsin EOU / EHTP / STP / BTP exemption /Tax in DTA remissionofservicetaxleviedandrelatedtoexports,shallbeallowed,asperprescribedprocedurein Chapter4 ofHBP v1.Exemption from 2.48.1 Unitsin SEZ shallbeexemptedfromservicetax.Service Tax in SEZ

Exemption from 2.48.2 Forallgoodsandservicesexportedfrom India,servicesService Taxon Services received / renderedabroad, whereeverpossible,shallbereceived abroadexemptedfromservicetax.

GRIEVANCE REDRESSALDGFT as a facilitator of2.49 DGFT hasacommitmenttofunctionasafacilitatorofexports / imports exportsandimports. Focusisongoodgovernance, whichdependsonclean,transparentandaccountabledeliverysystems.Citizens Charter2.49.1 DGFT hasinplacea Citizens Charter,givingtimeschedulesforprovidingservicestoclients,anddetailsofgrievancecommitteesatdifferentlevels.28Grievance Redressal2.49.2 Inordertofacilitatespeedy redressalofgrievancesofCommittee (GRC) tradeandindustry,anew grievanceredressalmechanism

hasbeenputinplaceintheformofGRC by aGovernmentResolution.TheGovernmentiscommittedtoresolvingalloutstandingproblemsanddisputespertainingtopastpolicy periodsthrough GRC setupon 2 7.10.2004,forcondoningdelays,regularizingbreachesby exportersinbonafidecases,resolvingdisputesoverentitlements,grantingextensionsforutilizationofAuthorisations.


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Export of perishable 2.50 Toreducetransactionand handlingcosts,asingle windowagricultural products systemtofacilitateexportofperishableagriculturalproduce hasbeenintroduced. Thesystemwillinvolvecreationofmulti-functionalnodalagenciestobeaccreditedby Agriculturaland Processed Food Products

Export Development Authority (APEDA), NewDelhi. Thedetailedprocedures havebeennotifiedatAppendix 40 ofHBP v1.29

CHAPTER 3

PROMOTIONAL MEASURESPROMOTIONAL MEASURES IN DEPARTMENT OF

COMMERCE

Assistance to States 3.1 SchemeforAssistanceto StatesforDeveloping Exportfor DevelopingExportInfrastructureand Allied Activities (ASIDE)isformulatedInfrastructure andtoinvolvethe Statesintheexporteffortbyproviding

Allied Activities (ASIDE) assistancetothe StatesGovernmentsforcreatingappropriateinfrastructureforthedevelopmentandgrowthofexports. The Schemeisadministeredby DepartmentofCommerce (DoC).Theobjectiveofschemeistoestablish amechanismforinvolvingthe StateGovernmentstoparticipateinfundingofinfrastructurecriticalforgrowth ofexportsbyprovidingexportperformancelinkedfinancialassistancetothem.Theactivitiesaimedatdevelopmentofinfrastructureforexportscanbefundedfromtheschemeprovidedsuch

activities haveoverwhelmingexportcontentandtheirlinkage with exportsisfullestablished. Thespecificpurposesforwhich fundsallocatedunderthe Schemecanbesanctionedandutilizedareasfollows: Creationofnew Export Promotion Industrial Parks/Zones (SEZs/Agri Business Zones)andaugmentingfacilitiesintheexistingones. Settingupofelectronicsandotherrelatedinfrastructureinexportconclave. EquityparticipationininfrastructureprojectsincludingthesettingupofSEZs.

Meetingrequirementsofcapitaloutlay ofEPIPs/EPZs/SEZs. Developmentofcomplementary infrastructuresuchas,roadsconnectingtheproductioncentres with theports,settingupofInland ContainerDepotsandContainerFreight Stations. Stabilizingpowersupply through additionaltransformersandislandingofexportproduction


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centreetc.30 Developmentofminorportsandjettiestoserveexportpurpose. Assistanceforsettingup Common Effluent Treatment

facilitiesand Any otheractivity asmay benotifiedby DoC.DetailsofASIDE Schemeareavailableat:http://www.commerce.nic.inorhttp://www.commerce.gov.in.Market Access Initiative 3.2 UnderMAI scheme, Financialassistanceisprovided(MAI) forexportpromotionactivitiesonfocuscountry,focusproductbasis. FinancialassistanceisavailableforExport Promotion Councils (EPCs), Industry and TradeAssociations (ITAs), AgenciesofStateGovernment,Indian CommercialMissions (ICMs)abroadandother

nationallevelinstitutions/eligibleentitiesasmaybenotified.A wholerangeofactivitiescanbefundedunderMAIscheme. Theseinclude,amongstothers,i.Marketstudies/surveys,ii. Settingupofshowroom / warehouse,iii. Participationininternationaltradefairs,iv. Displaysin Internationaldepartmentalstores,v. Publicity campaigns,vi. Brandpromotion,vii. Reimbursementofregistrationchargesforpharmaceuticalsandexpensesforcarryingoutclinicaltrialsetc.,infulfillmentofstatutory requirementsinthebuyercountry,viii. Testingchargesforengineeringproductsabroad,ix. Assistanceforcontesting Anti Dumpinglitigationsetc.Each oftheseexportpromotionactivitiescanreceivefinancialassistancefromGovernmentrangingfrom25% to 1 00% oftotalcostdependinguponactivity andimplementingagency. Fulltextofguidelinesisavailableat http://commerce.nic.in.Market Development3.3 UnderMDA Scheme,financialassistanceisprovidedAssistance (MDA) forarangeofexportpromotionactivitiesimplementedby EPCsand Trade Promotion Organizationsonthebasisofapprovedannualactionplans. Theschemeisadministeredby DOC. Assistanceincludes,amongst31others,participationin:i. Trade Fairsand BuyerSellermeetsabroadorin


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India,andii. Exportpromotionsseminars.iii. Financialassistance with travelgrantisavailabletoexporterstravelingtofocusareas,viz., LatinAmerica, Africa, CIS region, ASEAN countries,

Australiaand New Zealand. Inotherareas,financialassistance withouttravelgrantisavailable.MDA assistanceisavailableforexports havinganannualexportturnoverasprescribedinMDA guidelines. Fulltextofguidelinesisavailableat http://commerce.nic.in.Meeting expenses for3.4 DOC providesforreimbursementofcharges/expensesstatutory compliances in forfulfillingstatutory requirementsinthebuyercountry,buyer country for Trade includingregistrationchargesforproductregistrationRelated Matters forpharmaceuticals,bio-technology andagro-chemicalsproductsonrecommendationofEPCs. Financialassistanceisalsoprovidedforcontestinglitigation(s)intheforeign

country concerningrestrictions/antidumpingdutiesetc.onparticularproduct(s)ofIndianorigin,asprovidedundertheMarket Access Initiative (MAI) SchemeofDOC.Towns ofExport3.5 A numberoftowns haveemergedasdynamicindustrialExcellence (TEE) clusterscontributing handsomely to Indiasexports. Itisnecessary tograntrecognitiontotheseindustrialclusterswith aview tomaximizingtheirpotentialandenablingthemtomove higherinthevaluechainandtapnewmarkets.SelectedtownsproducinggoodsofRs. 750 Croreormorewillbenotifiedas TEE basedonpotentialforgrowth inexports. HoweverforTEE inHandloom, Handicraft,Agricultureand Fisheriessector,thresholdlimit wouldbeRs 150 Crores.(i) Recognizedassociationsofunits willbeprovidedfinancialassistanceunderMAI scheme,onprioritybasis,forexportpromotionprojectsformarketing,capacitybuildingandtechnologicalservices.(ii) Common Service ProvidersintheseareasshallbeentitledforEPCGscheme.(iii) Theprojectsreceivedfrom TEEsshallbeaccorded32priorityby SLEPC forfinancialassistanceunderASIDE.Notified Towns (TEEs)arelistedin Appendix 7 ofHBPv1.Brand Promotion and3.6 IBEF (originally called India Brand Equity FundandQuality laterrenamedas India Brand Equity Foundation) wassetupby the Ministry ofCommerceon 1 th July, 1 996, with


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theprimary objectivetopromoteandcreateinternationalawarenessofthe Madein Indialabelinmarketsoverseas. IBEF aimstopromote Indiaasabusinessopportunity by creatingpositiveeconomicperceptionsofIndiaglobally as wellaseffectively presentthe India

businessperspectiveandleveragebusinesspartnershipsinaglobalisedmarket-place.DOCprovidesfundsforcapacitybuildingforup-gradationofquality tonationallevel Institutionsand EPCstoorganizetrainingprogrammesfortheskillimprovementoftheexportersforquality up-gradation,reductioninrejection,productimprovementetc.asprovidedunderthe Market Access Initiative (MAI) SchemeofDOC.Test Houses 3.7 CentralGovernment willassistinmodernizationandupgradationoftest housesandlaboratoriestobringthematparwith internationalstandards.

PROMOTIONAL MEASURES IN DGFTQuality Complaints /3.8 Regional Sub-Committeeon Quality ComplaintsDisputes (RSCQC)setupat Regional Officesofthis Directorateshallinvestigate quality complaintsreceivedfromforeignbuyers.Guidelinesforsettlementofquality complaints,inparticular,andsuch othercomplaints,ingeneral,aregivenin Appendix-16 ofHBPv1.Trade Disputes affecting3.9 Ifitcomesto DGFTsnoticeorhe hasreasontobelieveTrade Relations thatanexportorimport hasbeenmadeinamannerthat(i)isgravelyprejudicialtotraderelationsofIndia withany othercountry; and / or(ii)isgravely prejudicialtointerestofotherpersonsengagedinexportsorimports; and / or(iii) hasbroughtdisreputetothecountry;33DGFT may takeactionagainstsuch exporterorimporterinaccordance with FT(D&R) Act, Rulesand Ordersmadethere-underand FTP.

3.10 EXPORT AND TRADING HOUSESEligibility forExport3.10.1 Merchantas wellas ManufacturerExporters, Serviceand Trading Houses Providers, Export Oriented Units (EOUs)and UnitsStatus locatedin Special Economic Zones (SEZs), Agri ExportZones (AEZs), ElectronicHardware Technology Parks(EHTPs), Software Technology Parks (STPs)and Bio-Technology Parks (BTPs)shallbeeligibleforstatus.Status Category 3.10.2 Applicantshallbecategorizeddependingon histotal FOB(FOR - fordeemedexports)exportperformanceduringcurrentpluspreviousthree years (takentogether)uponexceedinglimitbelow. ForExport House (EH) Status,exportperformanceisnecessary inatleasttwooutoffour


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years (i.e.,currentpluspreviousthree years).Status Category Export PerformanceFOB / FOR Value(Rupeesin Crores)Export House (EH) 20

StarExport House (SEH) 100Trading House (TH) 500StarTrading House (STH) 2500PremierTrading House (PTH) 7500Double Weightage and3.10.3 (i) Exportersin Small Scale Industry (SSI) / TinyotherConditions forSector/ Cottage Sector, Unitsregistered with KVICs /Grant of Status KVIBs, UnitslocatedinNorth Eastern States, Sikkimand Jammu & Kashmir, Unitsexporting handloom/handicrafts / handknottedorsilkcarpets,exportersexportingtocountriesin Latin America / CIS / sub-Saharan Africaaslistedin Appendix-9, Units having

ISO 9000 (series) / ISO 14 000 (series) / WHOGMP/HACCP / SEI CMM level-II andabovestatusgrantedby agencieslistedin Appendix-6 ofHBP v1,exportsofservicesandexportsofagroproductsshallbeentitledfordouble weightageonexportsmadeforgrantofstatus. Double Weightageshallbeadmissibleto Merchantas wellas ManufacturerExporters.However,ashipmentcangetdouble weightageonlyonceinany oneofabovecategories.34(ii) Transferofexportperformancefromonetoanotherisnotpermitted. Thereforedisclaimersystemshallnotbeallowedforcountingofexportturnover.(iii) Exportsmadeonre-exportbasisshallnotbecountedforrecognition.(iv) Exportsmadeby subsidiary ofalimitedcompanyshallbecountedtowardsexportperformanceoflimitedcompany forrecognitiononly iflimitedcompany hasamajority share holdinginsubsidiarycompany.Privileges ofExport and3.10.4 A Status Holdershallbeeligibleforprivilegesasunder:Trading House Status

Holders (i) Authorizationand Customs Clearancesforbothimportsandexportsonself-declarationbasis;(ii) FixationofInput-Outputnormsonpriority within 60days;(iii) Exemptionfromcompulsory negotiationofdocumentsthrough banks. Remittance / Receipts,however, wouldbereceivedthroughbankingchannels;


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(iv) 100% retentionofforeignexchangein EEFCaccount;(v) ExemptionfromfurnishingofBGin SchemesunderFTP;(vi) SEHsandaboveshallbepermittedtoestablish

Export Warehouses,asperDoRguidelines.(vii) Forstatus holders,adecisiononconferringofACPStatusshallbecommunicatedby Customs within 3 0daysfromreceiptofapplication with Customs.(viii)Asanoption,forPremierTrading House (PTH),theaveragelevelofexportsunderEPCG Schemeshallbethearithmeticmeanofexportperformanceinlast5 years,insteadof3 years.(ix) Status HoldersofspecifiedsectorsshallbeeligibleforStatus HolderIncentive ScripunderPara 3 .16 ofFTP.35

(x) Status HoldersofAgri. Sector(Chapter1 to 24 )shallbeeligibleforAgri. Infrastructure Incentive ScripunderVKGUY - Para 3.13.4 ofFTP.3.11 SERVICES EXPORTS

Services Exports 3.11 .1 Servicesincludeall 1 61 tradableservicescoveredunderGeneral Agreementon Tradein Services (GATS) wherepaymentforsuch servicesisreceivedinfreeforeignexchange. A listofservicesisgivenin Appendix 1 0 ofHBPv1.Allprovisionsofthis Policy shallapply mutatismutandistoexportofservicesasthey apply togoods.Registration cum 3.11 .2 Softwareexportersshallregisterthemselves withMembership Certificate Electronicsand Software EPC. Exportersof15 specific(RCMC) for Service serviceslistedin Sl. No. 34 ofAppendix 2 ofHBPv1Providers arerequiredtoregisterthemselves with Services EPC.Otherserviceexportersshallregisterthemselves withFederationofIndian Export Organisations (FIEO).Common Facility Centres 3.11 .3 GovernmentshallpromoteestablishmentofCommonFacility Centresforuseby home-basedserviceproviders,particularly inareaslike Engineering & ArchitecturalDesign, Multi-mediaoperations, Softwaredevelopersetc.,in Stateand Districtleveltowns,todraw inavastmultitudeofhome-basedprofessionalsintoservicesexportarena.

REWARD / INCENTIVE SCHEMES IN DGFT3.12 SERVED FROM INDIA SCHEME (SFIS)Objective 3.12.1 Objectiveistoaccelerategrowth inexportofservicessoastocreateapowerfulandunique Served From Indiabrand,instantly recognizedandrespected worldover.Eligibility 3.12.2 All Indian Service Providers,ofserviceslistedin


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Appendix 1 0 ofHBPv1, who havefreeforeignexchangeearningofatleast Rs. 10 Lakhsinprecedingfinancialyear/ currentfinancial yearshall qualify forDuty CreditScrip.36

For Individual Indian Service Providers,minimumfreeforeignexchangeearnings wouldbe Rs 5 Lakhs.Ineligible Services and3.12.3 Servicesand Service Providersaslistedin Para 3 .6.1 ofService Providers HBPv1 shallnotbeentitledforbenefitsunderthe SFISscheme.Entitlement3.12.4 All Service Providersshallbeentitledto Duty CreditScripequivalentto 1 0% offreeforeignexchangeearnedduringcurrentfinancial year.Eligible Remittances 3.12.5 Freeforeignexchangeearnedthrough InternationalCredit Cardsandotherinstrumentsaspermittedby RBIforrenderingofserviceshallalsobetakenintoaccount

forcomputationofDuty Credit Scrip.Imports Allowed3.12.6 Duty Creditscripmaybeusedforimportofany capitalgoodsincludingspares,officeequipmentandprofessionalequipment,officefurnitureandconsumables; thatareotherwisefreely importableand / orrestrictedunderITC(HS). Importsshallrelatetoany servicesectorbusinessofapplicant.UtilizationofDuty Creditscripearnedshallnotbepermittedforpaymentofduty incaseofimportofvehicles,evenifsuch vehiclesarefreely importableunderITC (HS).Incaseofhotels,clubs havingresidentialfacilityofminimum 3 0 rooms,golfresortsandstand-alonerestaurants havingcateringfacilities, Duty Creditscripmay alsobeusedforimportofconsumablesincludingfooditemsandalcoholicbeverages.Non Transferability 3.12.7 Entitlement / goods (imported / procured)shallbenontransferable (except withingroupcompany andmanagedhotels)andbesubjectto Actual Usercondition.Procurement from 3.12.8 UtilizationofDuty Credit ScripshallbepermittedforDomestic Sourcespaymentofexciseduty intermsofDoRnotificationissuedinthisbehalfforprocurementfromdomesticsources,ofitemspermittedforimportsunderSFIS Duty CreditScrip.373.13 VISHESH KRISHI AND GRAM UDYOG YOJANA

(VKGUY) (SPECIAL AGRICULTURE AND

VILLAGE INDUSTRY SCHEME)

Objective 3.13.1 ObjectiveofVKGUY istopromoteexportsof:(i) Agricultural Produceandtheirvalueadded


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products;(ii) MinorForest Produceandtheirvalueaddedvariants;(iii)Gram Udyog Products;(iv) Forest Based Products; and

(v) OtherProducts,asnotifiedfromtimetotime.Such productsshallbelistedin Appendix 3 7A ofHBPv1.Entitlement3.13.2 Duty Credit Scripbenefitsaregranted with anaimtocompensate high transportcosts,andtooffsetotherdisadvantages.Exporters,ofproductsnotifiedin Appendix 37A ofHBPv1,shallbeentitledforDuty Credit Scripequivalentto 5 % ofFOB valueofexports (infreeforeignexchange)forexportsmadefrom 27.8.2009 onwards.However,forexportsmade w.e.f2 7.8.2009,some Flowers,

Fruits, Vegetablesandotherproducts,aslistedin Table 2 ofAppendix 3 7A shallbeentitledtoanadditionaldutycreditscripequivalentto 2 % ofFOB valueofexports;overandabovethe 5 % or3 % VKGUY reducedrateentitlementavailableasperPara 3.13.3 below.Applicability of3.13.3 Duty Credit ScripbenefitsunderVKGUY schemeshallReduced Ratebegrantedonly atareducedrateof3 % ofFOB valueofexportsinsuch cases whereexporterhasalsoavailedbenefitsof:(i) Drawbackatrates higherthan 1%; and/or(ii) Specific DEPB rate (i.e.otherthanMiscellaneousCategorySr. Nos. 2 C & 2 D ofProductGroup90); and/or38(iii) Advance AuthorizationorDuty Free ImportAuthorization Importofinputs (otherthancatalysts,consumablesandpackingmaterials)fortheexportedproductforwhich Duty Credit ScripunderVKGUYisbeingclaimed.Agri. Infrastructure 3.13.4 Forexportsmadeduringaparticularyear,all StatusIncentive Scrip Holders (havingstatusrecognitionforthecurrent year)exportingproductscoveredunderITC HS Chapters 1 to 24 ,shallbeincentivized withduty creditscripequalto 1 0% ofFOB valueofagriculturalexports (includingVKGUY benefitsentitledunderPolicy Para 3.13.2)providedthatthetotalbenefitsforallstatus holdersputtogetherdoesnotexceed Rs 1 00 Cr(i.e. Rs 5 0 Crforeachhalfyear)andtheconditionsspecifiedin Para 3.7.2 ofHBPv1 aresatisfied.ZonalOffice, CLA, New Delhishallbethelicensing


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officeforgrantofthebenefittoallstatus holders.Thefollowingcapitalgoods / equipmentsshallbepermittedforimport:(i) Coldstorageunits (including Controlled Atmosphere(CA)andModified Atmosphere (MA) Stores); Precooling

Unitsand MotherStorage UnitsforOnions,etc.;(ii) PackHouses (includingfacilitiesforhandling,grading,sortingandpackagingetc.);(iii) ReeferVan / Containers; and(iv) OtherCapitalGoods / Equipmentsasmaybenotifiedin Appendix 37F.Importedcapitalgoods/equipmentshallbeutilizedforstorage,packingetc. (asin (ii)above)andtransportationofagriculturalproducts (includingagro-processedperishableproducts).

Thisadditionalbenefitshallbesubjecttoactualuserconditionand hencenon-transferable.However,forimportofCold Chain EquipmentthisIncentive Scripshallbefreely transferableamongst Status39Holders.

3.14 FOCUS MARKET SCHEME (FMS)Objective 3.14.1 Objectiveistooffset high freightcostandotherexternalitiestoselectinternationalmarkets with aviewtoenhance Indiasexportcompetitivenessinthesecountries.Entitlement3.14.2 Exportersofallproductstonotifiedcountries (asinAppendix 3 7C ofHBPv1)shallbeentitledforDutyCredit Scripequivalentto 3 % ofFOB valueofexports (infreeforeignexchange)forexportsmadefrom 2 7.8.2009onwards.Ineligible Exports 3.14.3 Thefollowingcategoriesofexportproducts / sectorsshallCategories / Sectors forbeineligibleforDuty Credit Scrip,underFMS scheme:

FMSa) Suppliesmadeto SEZ units;b) Service Exports;c) Diamondsandotherprecious,semipreciousstones;d)Gold,silver,platinumandotherpreciousmetalsinany form,includingplainandstudded Jewellery;e) Oresand Concentrates,ofalltypesandinallforms;f) Cereals,ofalltypes;g) Sugar,ofalltypesandinallforms;h) Crude / PetroleumOil & Crude / PetroleumbasedProductscoveredunderITC HS codes 2 709 to 2 715,ofalltypesandinallforms; and


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i) ExportofMilkand MilkProductscoveredunderITC HS Codes 0401 to 0406, 1 9011 001, 1 9011 010,2105 & 3501.3.15 FOCUS PRODUCT SCHEME (FPS)

Objective 3.15.1 Objectiveistoincentiviseexportofsuchproducts which

have high exportintensity / employmentpotential,soastooffsetinfrastructureinefficienciesandotherassociatedcostsinvolvedinmarketingoftheseproducts.Entitlement3.15.2 Exportsofnotifiedproducts (asinAppendix 37D ofHBPv1)toallcountries (including SEZ units)shallbeentitledforDuty Creditscripequivalentto 2 % ofFOBvalueofexports (infreeforeignexchange)forexportsmadefrom 27.8.2009 onwards.40However, Special Focus Product(s) /sector(s),coveredunderTable 2 and Table 5 ofAppendix 3 7D,shallbe

granted Duty Credit Scripequivalentto 5 % ofFOB valueofexports (infreeforeignexchange)forexportsmadefrom 27.8.2009 onwards.3.15.3 Market Linked Focus Products Scrip (MLFPS):ExportofProducts/Sectorsofhigh exportintensity/employmentpotential (which arenotcoveredunderpresent FPS List) wouldbeincentivizedat 2 % ofFOBvalueofexports (infreeforeignexchange)underFPSwhenexportedtothe Linked Markets (countries),whicharenotcoveredinthepresent FMS list,asnotifiedin Appendix 3 7D ofHBPv1,forexportsmadefrom27.8.2009 onwards.

3.16 Status Holders Incentive Scrip3.16.1 With anobjectivetopromoteinvestmentinupgradationoftechnology ofsomespecifiedsectorsaslistedin Para3.16.4 below, Status Holdersshallbeentitledtoincentivescrip @1% ofFOB valueofexportsmadeduring 2 009-10 andduring 2010-11,ofthesespecifiedsectors,intheformofduty credit. Thisshallbeoverandaboveany dutycreditscripclaimed/availedunderthischapter.3.16.2 Status Holdersavailing Technology Upgradation FundScheme (TUFS)benefits (underMinistry ofTextiles)duringaparticularyearshallnotbeeligibleforStatusHolders Incentive Scripforexportsofthat year.3.16.3 The Status Holders Incentive Scripshallbe with ActualUserConditionandshallbeusedforimportsofcapitalgoods (asdefinedin FTP)relatingtothesectorsspecifiedin Para 3.16.4 below.3.16.4 The Status Holdersofthefollowing Sectorsshallbeeligibleforthis Status Holders Incentive Scrip:


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1. LeatherSector(excludingfinishedleather);2. Textilesand Jute Sector;3. Handicrafts;4. Engineering Sector(excluding Iron & Steel, NonferrousMetalsinprimary orintermediateforms,

Automobiles & two wheelers,nuclearreactors &41partsand Ships, Boatsand Floating Structures;5. Plastics; and6. Basic Chemicals (excluding Pharma Products).

3.17 Common Provisions of Duty Credit Scrips, except

where specifically provided for Special Provisions

3.17.1 Governmentreservestherightinpublicinterest,tospecify exportproductsorservicesorexportstosuchcountries, which shallnotbeeligibleforcomputationofentitlement.

FurtherGovernmentreservestherighttoimpose / changetherate / ceilingon Duty Credit Scripunderthischapter.Similarly,Governmentmay alsonotify goods (inAppendix 3 7B ofHBPv1), which shallnotbeallowedforimportunderDuty Credit Scrips.Ineligible Exports 3.17.2 ForVKGUY, FMS, FPS (includingMLFPS)and StatusCategories /Sectors Holders Incentive Scrip,thefollowingexportscategories/sectorsshallbeineligibleforDuty Credit Scripentitlement:(i) EOUs / EHTPs / BTPs whoareavailingdirecttaxbenefits / exemption;(ii) ExportofimportedgoodscoveredunderPara 2 .35 ofFTP;(iii) Exportsthrough transshipment,meaningthereby thatexportsoriginatinginthirdcountrybuttransshippedthrough India;(iv) Deemed Exports;(v) Exportsmadeby SEZ unitsorSEZ productsexportedthrough DTA units; and(vi) Items, which arerestrictedorprohibitedforexportunderSchedule-2 ofExport Policy in ITC (HS).42Counting ofCommission 3.17.3 ForcomputationofDuty Credit Scrip Benefits, FOBin FOB value ofExports ValueofExports (infreeforeignexchange)shallinclude(in free foreign exchange) upto 12.5% Foreign Agency Commission.

Free Transferability 3.17.4 Duty Credit Scripanditemsimportedagainstit wouldbefreely transferable.However, Duty Credit ScripunderSFIS (Para 3 .12)andunderStatus Holders Incentive Scrip (Para 3 .16)shallnotbefreely transferable.Imports Allowed3.17.5 Duty Credit Scripmay beusedforimportofinputsor


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goodsincludingcapitalgoods,providedsameisfreelyimportableand / orrestrictedunderITC (HS). However,importofitemslistedin Appendix 3 7B ofHBPv1 shallnotbepermittedtobedebited.Duty Credit ScripsunderChapter3 ofFTP canalsobe

utilizedforpaymentofduty againstimportsunderEPCGschemeprovidedtheitemisimportableagainstthescrip.CENVAT / Drawback3.17.6 Additionalcustomsduty/excisedutypaidincash orthrough debitunderDuty Creditscripshallbeadjustedas CENVAT CreditorDuty DrawbackasperDoRrules,exceptunderSFIS.TRA Facility 3.17.7 UtilizationofDuty Credit ScripforimportsfromaportotherthanportofregistrationshallbeallowedunderTelegraphic Release Advice (TRA)facility asperDoRnotification.Exclusivity ofEntitlement3.17.8 Forashipment, Duty Credit Scripbenefitunderany

oneoftheschemescoveredinthis Chaptercanalonebeclaimed,atexportersoption.Import under Lease 3.17.9 UtilizationofDuty Credit Scripshallbepermittedforfinancingpaymentofduty incaseofimportofcapitalgoodsunderleasefinancingintermsofprovisionin Para 2.25 ofFTP.Transfer ofExport3.17.10 TransferofexportperformancefromonetoanotherPerformance shallnotbepermitted. Thus,ashipmentbillcontainingnameofapplicantshallbecountedinexportperformance / turnoverofapplicantonly ifexportproceedsfromoverseasarerealizedinapplicantsbankaccountandthisshallbeevidencedfrom BRC / FIRC.43However,forVKGUY, FMS and FPS (includingMLFPS),benefitscanbeclaimedeitherby thesupportingmanufacturer(along with disclaimerfromthecompany /firm who hasrealizedtheforeignexchangedirectly fromoverseas)orby thecompany / firm who hasrealizedtheforeignexchangedirectly fromoverseas.Facility of Payment of3.17.11 Duty Credit Scripscanalsobeused / debitedtowardsCustoms Duties in case paymentofCustoms DutiesincaseofEO defaultsunderofEO defaults AuthorizationsissuedunderChapters 4 and 5 ofthisPolicy. However,penalty / interestshallberequiredtobepaidincash.4445

CHAPTER-4

DUTY EXEMPTION & REMISSION SCHEMESDuty Exemption and4.1 Duty exemptionschemesenableduty freeimportofinputsRemission Schemes requiredforexportproduction. Duty ExemptionSchemesconsistof(a) Advance Authorisationscheme


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and (b) Duty Free Import Authorisation (DFIA)scheme. A Duty Remission Schemeenablespostexportreplenishment / remissionofduty oninputsusedinexportproduct. Duty Remission Schemesconsistof(a) Duty Entitlement Passbook(DEPB) Schemeand

(b) Duty Drawback(DBK) Scheme.Re-import of exported4.1.1 GoodsexportedunderAdvance Authorisation / DFIA /goods under Duty DEPBmay bere-importedinsameorsubstantially sameExemption / Remission formsubjectto DoRspecifiedconditions.Scheme

Value Addition 4.1.2 Valueaddition (VA)forthepurposeofthis Chapter(ExceptforGemsand Jewellery Sector)shallbe:-A - BVA = ----------- x 100, whereBA = FOB valueofexportrealised / FORvalueofsupply

received.B = CIF valueofinputscoveredby authorisation,plusany otherimportedmaterialsusedon which benefitofDBKisclaimed.

ADVANCE AUTHORISATION SCHEMEAdvance Authorisation 4.1.3 An Advance Authorisationisissuedtoallow duty freeimportofinputs, which arephysically incorporatedinexportproduct (makingnormalallowanceforwastage). Inaddition,fuel,oil,energy,catalysts which areconsumed/utilisedtoobtainexportproduct,may alsobeallowed.DGFT,bymeansofPublic Notice,may excludeany

product(s)frompurview ofAdvance Authorisation.Duty freeimportofmandatory sparesupto 1 0% ofCIFvalueofAuthorisation which arerequiredtobeexported/supplied with resultantproductareallowedunderAdvance Authorisation. Advance Authorisationsare46issuedforinputsandexportitemsgivenunderSION.ThesecanalsobeissuedonthebasisofAdhocnormsorselfdeclarednormsasperpara 4.7 ofHBP v1.Advance Authorisationcanbeissuedeithertoamanufacturerexporterormerchantexportertiedto

supportingmanufacturer(s)for:i) Physicalexports (includingexportsto SEZ); and/ orii) Intermediatesupplies; and /oriii) Supply ofgoodstothecategoriesmentionedinparagraph 8 .2 (b), (c), (d), (e), (f), (g), (i)and (j)ofFTP ;iv)supply ofstoresonboardofforeigngoingvessel/aircraftsubjecttoconditionthatthereisspecific


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SION inrespectofitem(s)supplied.Inaddition,inrespectofsupply ofgoodstospecifiedprojectsmentionedinparagraph 8 .2 (d), (e), (f), (g)and(j)ofFTP,an Advance Authorisationcanalsobeavailedby sub-contractortosuch projectprovidednameofsubcontractor(

s)appearsinmaincontract.Such Authorisationcanalsobeissuedforsuppliesmadeto United Nations OrganisationsorunderAid Programmeofthe United Nationsorothermultilateralagenciesandwhich arepaidforinfreeforeignexchange.However, Advance Authorizationforimportofraw sugar,canbeissuedeithertoamanufacturerexporterormerchantexportertiedtosupportingmanufacturer(s). Exportscanalsobemadebyprocurementofwhitesugarfromanyotherfactory(ies). Thisprovisionshallbeapplicableforexportsfrom 17.2.2009.

4.1.4 Advance Authorisationsareexemptedfrompaymentofbasiccustomsduty,additionalcustomsduty,educationcess,anti- dumpingduty andsafeguardduty,ifany.However,importsforsuppliescoveredunderparagraph8.2 (h) & (i) willnotbeexemptedfrompaymentofapplicableanti-dumpingandsafeguardduty,ifany.4.1.5 Advance Authorisationand / ormaterialsimportedthereunderwillbe with actualusercondition. It willnotbetransferableevenaftercompletionofexportobligation.However, Authorisation holderwill haveoptiontodispose47offproductmanufacturedoutofduty freeinputsonceexportobligationiscompleted. Incase where CENVATcreditfacility oninputs havebeenavailedfortheexportedgoods,evenaftercompletionofexportobligation,thegoodsimportedagainst Advance Authorisationshallbeutilizedonly inthemanufactureofdutiablegoods whetherwithinthesamefactory oroutside (by asupportingmanufacturer),forwhich theauthorisation holdershallproduceacertificatefromeitherthejurisdictionalCentralExcise Supdt.orChartered Accountant,attheoptionoftheexporter,atthetimeoffilingapplicationforEODC toRA concerned. However,theactualuserconditionshallnotbeapplicableincaseofraw sugartobeimportedfrom17.2.2009,till 3 0.09.2009 underAdvance AuthorizationScheme.Furtherthemanufacturingwastes/scrap,asallowed,canbedisposedoffwith thepaymentofapplicabledutybeforefulfilmentofexportobligation.4.1.6 Advance Authorisationsnecessitateexports with a


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minimumvalueadditionof15 %,exceptforitemsinGems& Jewellery sector,forwhich valueaddition wouldbeasperparagraph 4 A.2.1 ofHBP v.1. Exportsto SEZ Units/suppliesto Developers / Co-Developers,irrespectiveofcurrency ofrealization, wouldalsobecovered.

Forphysicalexportsforwhich paymentsarenotreceivedinfreely convertiblecurrency,sameshallbesubjecttovalueadditionasspecifiedin Appendix-11 ofHBP v1.IncaseofAuthorisationforimportofTea,minimumvalueadditionunderAdvance Authorisationshallbe 50%.Similarly,incaseofspices {coveredby Chapter9 ofITC(HS)},duty freeimportofspicesshallbepermittedonly forvalueadditionpurposeslikecrushing / grinding /sterilizationorformanufactureofoilsandoleoresinsandnotforsimplecleaning,grading,re-packingetc.4.1.7 Advance Authorisationshallbeissuedinaccordance with

Policy andprocedureinforceon Authorisationissuedate.ValidityperiodofAdvance Authorisationforimportshallbeasprescribedin HBP v1.48Free ofCost Supply by 4.1.8 Facility ofAdvance AuthorisationshallalsobeavailableForeign Buyerwheresomeorallinputsaresuppliedfreeofcosttoexporterby foreignbuyer.Insuch cases,forcalculationofvalueaddition,notionalvalueoffreeofcostinputsalong with valueofotherdutyfreeinputsshallbetakenintoconsideration. However,ifallinputsaresuppliedfreeofcost,exportershallalsohaveoptiontofollow provisionprescribedby DoR.ExportObligation 4.1.9 PeriodforfulfillmentofexportobligationunderAdvanceAuthorisationshallbeasprescribedin HBP v1.Provision forBIFR 4.1.9 A Any firm / company registered with BIFRorany firm/units company acquiringaunit, which isunderBIFRshallbeallowed Export Obligation Period (EOP)extensionasperrehabilitationpackageprepared,subjecttoapprovalofBIFRor5 yearsifnotspecified, withoutpaymentofcompositionfee.Aboveprovisionsapply alsoto SSI unitsasperrehabilitationschemeofconcerned Stategovernment.Advance Authorisation 4.1.10 Advance Authorisationcanalsobeissuedforannual

for Annual Requirementrequirement.Status Certificate holderandallothercategoriesofexporters havingpastexportperformance (inprecedingtwo years)shallbeentitledforAdvance AuthorisationforAnnual Requirement.EntitlementintermsofCIF valueofimportsshallbeupto


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300% ofthe FOB valueofphysicalexportand / orFORvalueofdeemedexportinprecedinglicensing yearorRs 1 crore, whicheveris higher.Advance Release Orders 4.1.11 HolderofAdvance Authorisation, Advance

(ARO) and Invalidation AuthorisationforAnnual Requirementand Duty Free

LetterImport Authorisationintendingtosourceinputsfromindigenoussources / State Trading Enterprises,inlieuofdirectimport, hasoptiontosourcethemeitheragainstAdvance Release Order(ARO)orInvalidationletterdenominatedinfreeforeignexchange / Indianrupees.However,suppliesmaybeobtainedagainst Authorisationfrom EOU / EHTP / BTP / STP / SEZ units, withoutconversioninto ARO orInvalidationletter.49TransfereeofDFIA shallalsobeeligibleforARO /invalidationletterfacility.

ValidityperiodofARO shallbeasprescribedin HBP v1.Back-to-Back Inland4.1.12 HolderofAdvance Authorisation, Advance AuthorisationLetter ofCreditforAnnual Requirementand DFIA may,insteadofapplyingforan ARO orInvalidationletter,availofthefacility ofBack-to-BackInland LetterofCreditinaccordance with procedurespecifiedinHBP v1.Prohibited Items 4.1.13 Prohibiteditemsofimportsmentionedin ITC(HS)shallnotbeimportedunderAdvance Authorisation / DFIA.Furtheritemsreservedforimportsby STEscannotbeimportedagainst Advance Authorisation / DFIA. Howeverthoseitemscanbeprocuredfrom STEsagainst ARO orInvalidationletter.STEsarealsoallowedtosellgoodson High Sea Salebasisto holdersofAdvance Authorisation / DFIA holder.Inaddition, STEsarepermittedtoissue No ObjectionCertificate (NOC)forimportby advance Authorisation/DFIA holder. Authorisation Holderwouldberequiredtofile Quarterly Returnsofimportseffectedagainstsuch NOC toconcerned STE and STE wouldsubmithalf-yearly importfiguresofsuch importstoconcernedadministrativeDepartmentformonitoring with acopyendorsedto DGFT.Similarly prohibiteditemsofexportsmentionedin ITC(HS)shallnotbeexportedunderAdvanceAuthorisation / DFIA scheme. ExportofrestricteditemsshallbesubjecttoallconditionalitiesorrequirementsofExport Authorisationorpermission,asmay berequired,underSchedule II ofITC (HS).Admissibility of4.1.14 Incaseofan Advance Authorisation,drawbackshallbeDrawbackavailableforany dutypaidmaterial, whetherimported


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orindigenous,usedingoodsexported,asperdrawbackratefixedby DoR, Ministry ofFinance (DirectorateofDrawback). DrawbackallowedshallbementionedinAuthorisation.50

DUTY FREE IMPORT AUTHORISATION (DFIA) SCHEMEScheme 4.2.1 DFIA isissuedtoallow duty freeimportofinputs,fuel,oil,energy sources,catalyst which arerequiredforproductionofexportproduct. DGFT,bymeansofPublicNotice,may excludeanyproduct(s)frompurview ofDFIA. Thisschemeisinforcefrom 1st May, 2006.Entitlement4.2.2 Provisionsofparagraph 4 .1.3 shallbeapplicableincaseofDFIA. However,these Authorisationsshallbeissuedonly forproductsforwhich Standard Inputand OutputNorms (SION) havebeennotified.Incaseofpostexport DFIA,amerchantexportershall

berequiredtomentiononly name(s)andaddress(s)ofmanufacturer(s)oftheexportproduct(s). Applicantisrequiredtofileapplicationtoconcerned RA beforeeffectingexportsunderDFIA.Pre-export Authorisationshallbeissued with actualuserconditionandshallbeexemptedfrompaymentofbasiccustomsduty,additionalcustomsduty / exciseduty,educationcess,anti-dumpingduty andsafeguardduty,ifany.IncaseofactualuserDFIA and where CENVAT creditfacility oninputs havebeenavailedfortheexported

goods,evenaftercompletionofexportobligation,thegoodsimportedagainstsuch DFIA shallbeutilizedinthemanufactureofdutiablegoods whetherwithinthesamefactory oroutside (by asupportingmanufacturer).Import items 4.2.3 Provisionsofparagraphs 4 .1.11 , 4 .1.12, 4 .1.13 and 4 .1.14 ofFTPshallbeapplicableforDFIA holder.

Value Addition 4.2.4 A minimum 2 0% valueadditionshallberequiredforissuanceofsuch authorisation,exceptforitemsingemsandjewellery sector,forwhich valueaddition wouldbeasperparagraph 4 A.2.1 ofHBP v1. Itemsforwhich highervalueadditionisprescribedunderAdvance Authorisation

Scheme,shallbeapplicable.ExportObligation 4.2.5 ProcedureandtimeperiodrelatedtofulfillmentofExportObligation havebeenlaiddownin Chapter4 ofHBP v1.51Transferability 4.2.6 Onceexportobligation hasbeenfulfilled,requestfortransferability ofAuthorisationorinputsimportedagainstitmay bemadebeforeconcerned RA. Once,transferabilityisendorsed, Authorisation holdermay transferDFIA or


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duty freeinputs,exceptfuelandany otheritem(s)notifiedby DGFT. However,forfuel,importentitlementmaybetransferredonly tocompanies which havebeengrantedauthorisationtomarketfuelby Ministry ofPetroleumandNaturalGas.

Oncetransferability isendorsed,imports / domesticprocurementagainstauthorisationortransferofimportedinputs / domesticallyprocuredinputsshallbesubjecttopaymentofapplicableadditionalcustomsduty / exciseduty. Whileendorsingtransferability,authorisation wouldbearanoteastoliability ofsuch additionalcustomsduty / exciseduty. However,incase where CENVATfacility hasnotbeenavailed,exemptionfromadditionalcustomsduty/ exciseduty wouldbeavailableevenafterendorsementoftransferability on DFIA.WhereverSIONsprescribeactualuserconditionand

incaseofAcetic Anhydride, Ephedrineand Pseudo-Ephedrine, DFIA shallbeissued with actualuserconditionfortheseinputsandnotransferability shallbeallowedfortheseinputsevenafterfulfillmentofexportobligation.However,forauthorizationsissuedpriorto 1 .4.2007,exemptionfrom Additional Customs Duty/ Excise Dutyshallcontinuetobeavailableevenafterendorsementoftransferability asprovidedin FTP (RE-2006).CENVAT Facility 4.2.7 CENVAT creditfacility shallbeavailableforinputseitherimportedorprocuredindigenously.

DUTY ENTITLEMENT PASSBOOK(DEPB) SCHEME

DutyE

ntitlement4.3 ObjectiveofDEPB istoneutraliseincidenceofcustomsPassbook (DEPB) duty onimportcontentofexportproduct. ComponentScheme ofcustomsduty onfuel (appearingasconsumableintheSION)shallalsobefactoredinthe DEPB rate. ComponentofSpecial Additional Duty shallalsobeallowedunderDEPB (asbrandrate)incaseofnon-availmentofCENVATcredit. Neutralisationshallbeprovidedby way ofgrantofduty creditagainstexportproduct.524.3.1 Anexportermay apply forcredit,atspecifiedpercentageofFOB valueofexports,madeinfreely convertible

currency. Incaseofsupplyby a DTA unittoa SEZ unit/SEZ Developer/Co-Developer,anexportermay applyforcreditforexportsmadeinfreely convertiblecurrencyorpaymentmadefromforeigncurrency accountofSEZUnit/SEZ Developer/Co-Developer. Inaddition,theexportershallalsobeentitledforDEPB benefitincasepaymentismadein Indian Rupeesby SEZ Developer/Co-Developerforsuppliesreceived w.e.f10.2.2006.


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Creditshallbeavailableagainstsuch exportproductsandatsuch ratesasmay bespecifiedby DGFT by wayofpublicnotice. Creditmay beutilizedforpaymentofCustoms Duty onfreely importableitemsand/orrestricteditems. DEPB Scripscanalsobeutilizedforpaymentof

duty againstimportsunderEPCG Scheme. Further, DEPBScripscanalsobeused / debitedtowardspaymentofCustoms Duty incaseofEO defaultsforAuthorizationsissuedunderChapters 4 and 5 ofthis Policy. However,penalty / interestshallberequiredtobepaidincash.Prohibiteditemsofexportsmentionedin ITC(HS) Book(asamendedfromtimetotime)shallnotbeentitledforDEPB creditexceptfortheexportseffectedundertransitionalfacility, whereverallowed,intermsofparagraph 1.5 ofFTP.4.3.2 DEPB holdershall haveoptiontopay additionalcustoms

duty incash as well.Validity 4.3.3 ValidityperiodofDEPB forimportshallbeasprescribedinHBP v1.Transferability 4.3.4 DEPB and / oritemsimportedagainstitarefreelytransferable. TransferofDEPB shall howeverbeforimportatspecifiedport, which shallbetheportfromwhereexports havebeenmade. ImportsfromaportotherthantheportofexportshallbeallowedunderTRA facilityaspertermsandconditionsofDoRnotification.Applicability of4.3.5 Additionalcustomsduty / Excise Duty and SpecialDrawbackAdditional Dutypaidincash orthrough debitunderDEPB may alsobeadjustedas CENVAT CreditorDutyDrawbackasperDoRrules.53

GEMS AND JEWELLERYScheme for Gems 4A Exportersofgemsand Jewellery canimport / procureand Jewellery duty freeinputsformanufacturing.

Replenishment4A.1 Exportersmay obtain Replenishment (REP)Authorisation Authorisationsfrom RA inaccordance withprocedurespecifiedin HBP v1.4A.1.1 Replenishmentauthorisationmay alsobeissuedforconsumables & toolsasperparagraph 4A.28 ofHBP v1.

Import of Diamonds for4A.2 Theauthorizedoffices/agenciesin IndiaofGemologicalCertification/ Grading & InstituteofAmerica (GIA)orany otheragency approvedre-exportinthisregard,shallbepermittedtoimportdiamondstotheirlaboratoriesforthepurposeofcertification/gradingreportsby them with aconditionthatthesameshouldbere-exported with thecertification/gradingreportsissuedby them withoutany importduty,aspertheprocedurelaiddowninHBP v1.


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Schemes for Gold/4A.3 Exportersofgold / silver / platinumjewellery andarticlesSilver/ Platinum thereofmay importtheiressentialinputssuch asgold,Jewellery silver,platinum,mountings,findings,rough gems,preciousandsemi-preciousstones,syntheticstonesandunprocessedpearlsetc.inaccordance with theprocedure

specifiedinthisbehalf.Nominated Agencies 4A.4 NominatedagenciesareMMTC Ltd, Handicraftand Handloom Export Corporation (HHEC), StateTrading Corporation (STC),the Projectand EquipmentCorporation (PEC)ofIndia Ltd, STCL Ltd, MSTC Ltd,Diamond India Limited (DIL),Gems & Jewellery ExportPromotion Council (G&J EPC)), StarTrading House(only forGems & Jewellery sector)and PremierTradingHouseunderParagraph 3 .10.2 ofFTP andany otheragency authorisedby RBI. Exporters (except EOUsandunitsin SEZ)may obtaingold / silver / platinumfrom

nominatedagency(s).Procedureforimportofpreciousmetalby theseagencies(otherthanthoseauthorizedby RBI andtheGems &Jewellery unitsoperatingunderEOU and SEZ schemes)andthemonitoringmechanismthereofshallbeaspertheprovisionslaiddowninHBP v1 inthisregard.54A bankauthorisedby RBI isallowedexportofgoldscrapforrefiningandimportstandardgoldbarsasperRBIguidelines.Items ofExport4A.5 Followingitems,ifexported, wouldbeeligibleforfacilities:(a)Goldjewellery,includingpartly processedjewelleryandarticlesincludingmedallionsandcoins(excludinglegaltendercoins), whetherplainorstudded,containinggoldof8 caratsandabove;(b) Silverjewellery includingpartly processedjewellery,silverware,silverstripsandarticlesincludingmedallionsandcoins (excludinglegaltendercoinsandany engineeringgoods)containingmorethan50% silverby weight;(c) Platinumjewellery includingpartlyprocessedjewellery andarticlesincludingmedallionsandcoins(excludinglegaltendercoinsandany engineeringgoods)containingmorethan 5 0% platinumbyweight.Value Addition 4A.6 Value Addition (VA)forgemsandjewellery sectorshallbeasperparagraph 4 A.2.1 ofHBP v1. It wouldbecalculatedasunder:AB


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VA = ----------- x 100, whereBA = FOB valueoftheexportrealised / FORvalueofsupply received.B = Valueofinputs (includingdomesticallyprocured)

such asgold / silver / platinumcontentinexportproductplusadmissible wastagealong with valueofotheritemssuch asgemstoneetc. Wherevergold hasbeenobtainedonloanbasis,valueshallalsoincludeinterestpaidinfreeforeignexchangetoforeignsupplier.Wastage Norms 4A.7 Wastageormanufacturinglossforgold / silver / platinumjewellery shallbeadmissibleasperparagraph 4 A.2 ofHBP v1.

Export against Supply 4A.8 Whereexportordersareplacedonnominatedagencies/by Foreign Buyerstatus holder/ exportersofthree yearsstanding having

55anannualaverageturnoverofRs. Five Croresduringprecedingthreelicensing years,foreignbuyermay supplyinadvanceandfreeofcharge,gold / silver / platinum,alloys,findingsandmountingsofgold / silver / platinumformanufactureandexport.Such suppliescanalsobeinadvanceandmay involvesemi-finishedjewellery includingfindings / mountings /componentsforrepairs / re-makeandexportsubjecttominimumvalueadditionof1 0%. However,ifsoimportedsemifinishedgold / silver /platinumjewellery isexportedasstuddedjewellery,valueadditionof15 % shallbeachieved. Insuch casesofexport, wastageof2 % may bepermitted.Exportsmay bemadeby nominatedagenciesdirectly orthrough theirassociatesorby status holder/ exporter.Importand Exportoffindingsshallbeonnettonetbasis.Export Against Supply 4A.9 Exportermay obtaingold / silver / platinumasaninputby Nominated Agencies forexportproductsfromnominatedagenciesinadvanceorasreplenishmentafterexportsinaccordance withspecifiedprocedure.Export Against Advance 4A.10 An Advance Authorisationmay begrantedforduty freeAuthorisation importof:(a)Goldoffinenessnotlessthan 0.995 andmountings,sockets,framesandfindingsof8 caratsandabove;(b) Silveroffinenessnotlessthan 0.995 andmountings,sockets,framesandfindingscontainingmorethan50% silverby weight;(c) Platinumoffinenessnotlessthan 0.900 and


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mountings,sockets,framesandfindingscontainingmorethan 50% platinumby weight.4A.11 Such authorisationsshallcarry anexportobligationtobefulfilledasperprocedurespecifiedinparagraph 4A ofHBP v1. Valueadditionshallbeasperparagraph 4 A.2.1 ofHBP v.1.

Advance Authorisation holdermay obtaingold / silver/platinumfromnominatedagenciesinlieuofdirectimport.56Gem Replenishment4A.12 Gem Replenishment (Gem & Jewellery REP)Authorisation Authorisationmay beissuedasgiveninparagraph 4 A.8,4A.9 and 4A.10 above.Incaseofplainorstuddedgold / silver / platinumjewellery andarticles,valueofsuch Authorisationsshallbedetermined with referencetorealisationinexcessofprescribedminimumVA.Such Gem REP Authorisationsshallbefreely

transferable.Gem REP Rate and4A.13 Replenishment Rateanditemofimport willbeasItem prescribedin Appendix 12B ofHBP v1.Export Promotion 4A.14 Nominatedagenciesandtheirassociates, with theTours/Export ofapprovalofDepartmentofCommerce,andothers, withBranded Jewellery theapprovalofGem & Jewellery EPC (GJEPC),mayexportgold / silver / platinumjewellery andarticlesthereofforexhibitionsabroad.Personalcarriageofgold / silver / platinumjewellery,precious,semi-preciousstones,beadsandarticlesandexportofbrandedjewellery isalsopermitted,subjecttoconditionsasin HBP v1.PersonalCarriage of4A.15 Personalcarriageofgemsandjewellery exportparcelsExport / Import Parcelsby foreignboundpassengersandimportparcelsby anIndianimporter/foreignnationalmaybepermittedasinHBP v1.Export by Post4A.16 Incaseofexportsthrough Foreign Post Office (includingvia Speed Post),valueofjewelleryparcelsshallnotexceed US$ 75000 and 20 kg.by weight.Diamond & Jewellery 4A.17 Firmsandcompaniesdealinginpurchase/ saleofroughDollar Accounts orcutandpolisheddiamonds/preciousmetaljewelleryplain,minakariand / orstudded with / withoutdiamondand/orotherstones, with atrackrecordofatleasttwo yearsinimportorexportofdiamonds / colouredgemstones/ diamondandcolouredgemstonesstuddedjewellery / plaingoldjewellery,and havinganaverageannualturnoverofRs. 3 croresoraboveduringprecedingthreelicensing years,may alsocarry outtheirbusinessthrough designated Diamond DollarAccounts (DDA).57


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Dollarsinsuch accountsavailablefrombankfinanceand/ orexportproceedsshallbeusedonly for:(i) Import / purchaseofrough diamondsfromoverseas/localsources;(ii) Purchaseofcutandpolisheddiamonds,coloured

gemstonesandplaingoldjewellery fromlocalsources;(iii) Import / purchaseofgoldfromoverseas / nominatedagenciesandrepaymentofdollarloansfromthebank; and(iv) Transferto Rupee Accountofexporter. DetailsofthisDDA SchemearegiveninHBP v1.A non DDA holderisalsopermittedtosupply cutandpolisheddiamondsto DDA holder,receivepaymentindollarsandconvertsameinto Rupees within 7 days.Cutandpolisheddiamondsandcolouredgemstonesso

suppliedby non-DDA holderwillalsobecountedtowardsdischargeofhisexportobligationand / orentitle himtoreplenishment Authorisation.4A.18 Gemsand Jewellery exportersshallbeallowedtoexportcutandpolishedpreciousandsemi-preciousstonesforthetreatmentandre-importasperCustomsrulesandregulations. Incaseofre-export,theexportershallbeentitledforduty drawbackasperrules.Re-import of rejected4A.19 Gems & Jewellery exportersshallbeallowedtore-importjewellery rejectedpreciousmetaljewellery asperpara 4 A.32 ofHBP v1.Export on consignment4A.20 Gems & Jewellery exportersshallbeallowedtoexportbasis diamond,gemstones & jewellery onconsignmentbasisasperHBP v1 and Customsrulesandregulations.5859

EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEMEZero duty EPCG Scheme Zeroduty EPCGschemeallowsimportofcapitalgoodsforpreproduction,productionandpostproduction (including CKD/SKD thereofas wellascomputersoftwaresystems)atzero Customsduty,subjecttoanexportobligationequivalentto 6 timesofduty savedoncapitalgoodsimportedunderEPCGscheme,tobefulfilledin 6 years reckonedfrom Authorizationissue-date. Thescheme willbeavailable

forexportersofengineering & electronicproducts,basicchemicals & pharmaceuticals,apparels & textiles,plastics, handicrafts,chemicals & alliedproductsandleather&leatherproducts; subjecttoexclusionsasprovidedinHBPv1. Validityperiodforimportofcapitalgoodsandprovisionforextensioninexportobligationperiod willbeasseparatelyprovidedinthe HBPv1. Allotherprovisionspertainingtoconcessional 3 %duty EPCGschemeunderthis Chapter,totheextentthey arenotinconsistent withtheaboveprovisionsofzeroduty EPCGscheme,shallbeapplicabletothezerodutyEPCGschemealso. Thezeroduty EPCGscheme willbeinoperationtill 31.3.2011 .

8/9/2019 Foreign Trade Po